The Chancellor’s failure to even mention the energy profits levy, or windfall tax, in her Budget statement has angered business leaders who say it will mean thousands more jobs will be lost.
Rachel Reeves will allow energy companies to expand oil and gas drilling at – or near to – existing sites in what is seen as a watering down of Labour’s manifesto commitment not to allow new exploration in the North Sea.
However, it was seen as too little to avoid a “cliff-edge” for the sector amid claims that companies will not take advantage of the concession if the huge tax bill remains in place.
Russell Borthwick, chief executive at Aberdeen & Grampian Chamber of Commerce, said: “The UK Government has accepted, through their announcement on tiebacks, that their policy towards a sustainable future for the North Sea is completely and utterly flawed, risks terminal damage to the UK’s energy security and is proving economically ruinous.
“But limited flexibility on licensing is immaterial if those companies producing the energy we need are taxed at a crippling rate of 78% until 2030. They cannot invest or survive while the EPL remains in place.”
Mr Borthwick added: “The industry put forward a case for a reformed EPL that would have delivered more than 100 projects, £50bn of investment and protected around 160,000 jobs. Crucially, it would have also delivered an addition £10bn in tax revenues over the next decade.
“Without so much as a mention in the Chancellor’s statement today, the UK Government has instead opted for a cliff-edge end to North Sea production and to tax the industry to death inside five years. Jobs will be lost in their thousands as a direct result of this government’s failure to act.
“As the voice of business in the North-east of Scotland, we will refocus our efforts on ensuring that this jobs and economy-wrecking tax is brought to an end as soon as possible. Aberdeen is not going down without a fight.”
Alan Stewart, Aberdeen-based partner at accountancy and business advisory firm MHA, said: “With no movement on the Energy Profits Levy, the uncertainty facing the sector remains unchanged.
“Companies cannot plan effectively without a stable long-term framework, and today’s outcome does little to address the hesitation already evident across investment decisions.
“A 78% tax rate continues to cast a long shadow over activity, pausing projects, slowing commitments and weakening confidence throughout the UK’s wider energy ecosystem.
“As things stand, the industry is left without the clarity required to support a balanced energy mix or deliver a fair and orderly transition. Stability is essential for maintaining secure domestic supply and for giving businesses the confidence to invest in both current production and future technologies.
“The effects extend well beyond operators. Local businesses, supply chains and regional economies across the UK all feel the impact when uncertainty endures.
“Without a consistent and durable approach, the UK risks prolonging a period of caution at a time when the demands on energy security and long-term planning have rarely been greater.”
SNP Westminster Leader, Stephen Flynn MP, said: “The Labour Party’s tax on Scotland’s energy will continue to cost jobs, put at risk our energy security, economic opportunity and the pathway towards building a new renewable energy industry alongside a world class oil and gas sector.
“Professor Underhill at the University of Aberdeen deserves enormous credit for driving forward this sensible proposal on licensing, but we can’t escape from the fact that 1,000 jobs are being lost each month because of the Labour Party’s tax on Scotland’s energy.
“Having promised to save the Grangemouth refinery only for it to close, having failed to lift a finger to save Mossmorran and by choosing to tax the North Sea out of business – the Labour Party seem determined to tax Scotland’s energy sector and industrial base out of existence.”
Scottish Conservative shadow energy secretary Douglas Lumsden MSP said: “Workers in Scotland’s oil and gas sector won’t be fooled by Labour’s latest plan for the North Sea.
“It will do nothing to stop jobs haemorrhaging from the industry especially when Keir Starmer’s government have also doubled down on keeping the Energy Profits Levy in place.
“Labour should have ditched their ban on new licences and finally given the industry some light at the end of the tunnel. Instead, they have hung the sector out to dry.
“We will continue to demand an affordable transition that protects jobs and keeps bills low for businesses and consumers.”
Green MSP Patrick Harvie took a different view, saying the news on extended exploration “will be celebrated by some of the world’s biggest polluters, who are already raking in massive profits while our world burns.
“Any move to allow more new drilling will have a devastating impact for people and planet. It is a U-Turn that will have catastrophic consequences for our climate.”
#Dismay #Reeves #fails #mention #windfall #tax #Daily #Business